Jakyasar

If I am not mistaken, SECURE only allows retroactive election if and only if the plan is a new plan established by 4/15/2024 (no extension allowed). I am not aware of any retroactive election for deferrals for already existing plans i.e. elections had to be made by 12/31/2023. If no election was made (or an older one exists), PS only i.e. stuck with 25% limit. I might be wrong and curious what others will say.

No, they are not required to fully restate. The only requirement is to provide good faith amendments. You need to contact the provider of the document to obtain these amendments. This assumes that the current document is of pre-approved nature. Please keep in mind that these amendments are good faith (not IRS approved) and if you want absolute certainty of full compliance then either convince your client to fully restate or file for a determination on termination (which is a frivolous attempt if the document is already preapproved and might end up being more expensive and time consuming). Whatever you/client decide to do, make all is done by termination date. On a side note, I try to get my clients to fully restate and provide them the reasons why especially if they have millions in the plan. But this is me. FWIW

I agree but the debate is - can you have full year when the biz starts in the middle of the year? I have seen this done this way and ok'ed by many but some practitioners state that it is a no, you cannot start prior to biz start date. We had this conversation sometime ago, just cannot find it (do not have time to research till after 15th)

I recall that too but could not locate yet, still searching

Thank you Bill, hope all is well.

Asking for a friend, do not have more details but a general question. Joe owns 81% of the company. Joe and his wife Mary were both the in the plan. Joe stops taking salary and also no longer in the plan but Mary is. Is Mary still an HCE under attribution rules? I say yes. Any comments appreciated.

Hi Sole prop, started biz 7/30/2023, over age 50. Wants a 401k plan for 2023 (ok under SECURE 2.0) Made 125k of net c for 2023. Assume after SE tax adjustment I think I can make the plan effective 1/1/2023 and get the full 30k as deferral, correct? If I start the plan, do I need to prorate the 30 to 5/12th? For PS I can do max 25k and is this doable with either full or short plan year? Thanks

Hi Never a dull moment with pensions. Sole prop, has DB and 401k/PS plans. 2022 401k/PS (first year) was deposited into the DB account in October (just found out). DB is terminated 11/30/2023 and all was rolled over into an IRA including the 401k/PS portion (the plan is still active). To add more fun, when DB was rolled over, the RMD was calculated on the full amount i.e. RMD was calculated incorrectly (however RMD included the portion attributable to 401k/PS portion. So, how does one correct all this? Such a mess, they did not even tell me all this even though I was very specific when deposits were going to be made. Anyone has experience with this mess? Thanks

Hi Asking for a friend as I do not work with plans that have union employees DC/CB combo. Union employees excluded from CB Union employees only eligible for 401k deferral+SH and excluded from PS (both union and non-union are covered under one plan) Does union employee get a gateway? Can they be tested totally separately? Any insights are appreciated. Thanks

Good points but I still think that the extra (paid to the spouse of the owner) payment is not a periodic payment. You are correct that no spousal consent would be needed as it is 50J&S however, I still think this is a distribution thus withholding. From what I have been reading this is not a biggie but that fact that the plan does not provide in-service past NRA is an issue. All above are intellectual discussion purposes and see if I missed anything here from reading SCP rules. However, your suggestion on asking for the money back is definitely a sound one and looks good on good faith. Thank you for that. This is pretty much owner asking the spouse to return the monies.

Here is a new one for me. Told the active client RMD was 3k/month for 9 months (first year) but took 10. There is no in-service allowed under the plan document. Is this something that can be corrected under SCP? There was no withholding nor spouse consent done as I just found out and was never told about this. I know it is a small amount but I still want to make sure all ducks are in a row. Thanks

If I was born on 4/11/1952, my first RMD is due 4/1/2025, am I correct?

Thanks, I was thinking uniform vs non-uniform and that is where things got mixed up.

Hi Double checking the following for a combo plan design as haven't seen for a while: Existing DC plan with NRA 65 only Planning to add a DB plan for 2023 with NRA 65/5 YOP Owner is age 64. Under DC plan NRA is 65 Under proposed DB plan NRA is 68 What is the testing age for combo plan? The system is taking the AB and actuarially reducing to age 65 and testing it. I find this a bit skewed and favorable to owner as: less years to project lower AB for testing What am I missing here? Thanks

Perfect, thank you for reminding me about component HCE requirement. All the best

Looking at a DB/DC combo and checking on otherwise excludable (OEX) testing Do I need to have an HCE in the OEX group for the PS portion? This is for 401a4 only as 410b passes easily without separating the groups (this is NESH plan with 3% mandatory allocation) It makes a difference in the gateway as I have 5 NHCEs that are OEX. Thanks

I agree with the retro though still looking into it. Second part, not sure. Appreciate your comments

Hi Looking at a proposal for combo plan DB/DC, owner plus a bunch of employees DC is in existence for many years and DB will be retro to 2023. No PBGC coverage. Just found out that, the owner of the company sponsoring the DC plan also has a schedule c (no employees) which has substantial income but not adopted the DC plan as an additional employer so only w-2 is being used as his income. FYI W2 is 150k and schedule c income is 1M Q1. Can the schedule c retroactively adopt the DC plan as additional employer? Q2. If schedule c cannot adopt the DC plan retroactively as an additional employer but is included in the new DB plan, what compensation can be used for: Combined testing Combined deduction at 6% DC limit Combined deduction at 31% limit Thank you

Yes, pro-rata with no integration. Thanks for your input and confirming my thoughts. Now let's see if they will agree to a second DC plan.

Hi, thanks for the responses My question was (it is for retroactively adopting a CB for 2023), can I add a new PS only plan for 2023 with a different allocation and use the new one instead of the existing provisions? Existing provisions are comp-to-comp New proposed provision would be everyone in their own group Is there any anti-cutback issue here?

Hi Looking at a takeover and a combo plan design. Existing plan has deferrals, basic match, EACA and PS. PS is comp-to-comp with last day rule but no hour requirement so not a good option for combo plans. I was asked to look into a possible 2023 CB plan addition. Is it possible to add a new PS only plan and not utilize the existing plan's PS provisions? Also, as I never worked with EACA, does it affect any combo designs? Do not think but checking. Thanks

As an addendum, to make sure I am understanding correctly that I can do the restatement prior to 12/31/2024, I found below from the IRS website. The plan in question satisfies all conditions. Am I wrong or missing anything? ------------------------------------ Correction programs available: Self-Correction Program Some, plan document failures may be corrected on or after April 19, 2019 under SCP if certain conditions are met. The conditions are: Plan document failures must be corrected within the two-year correction period specified in Rev. Proc. 2021-30, section 9. The failure begins in the plan year that includes the end of the applicable remedial amendment period. Plan must have a favorable letter as defined in Rev. Proc. 2021-30, section 5.01. SCP is not available to correct a failure to timely adopt an initial IRC 401(a) plan document. Corrective amendments to resolve demographic failures that were not timely adopted are not eligible for SCP and must be resolved under VCP or Audit CAP. The late adoption of discretionary amendments is not considered a plan document failure. Refer to Rev. Proc. 2021-30, sections 4.01, 4.03, 4.04 and 4.05 for program eligibility requirements. Example 1: The Carrot Stick Company has sponsored a 401(k) plan since 1997. They use a pre-approved plan document. On May 3, 2019 the plan sponsor realized that they failed to timely amend their plan for EGTRAA by the April 30, 2010 deadline and for PPA by the April 30, 2016 deadline respectively. The EGTRRA document was adopted on June 30, 2015 and the PPA document was adopted on December 5, 2018. Can these failures be considered resolved under SCP per Rev. Proc. 2021-30? The answer is no. The failures can't be resolved under SCP. The correction of the failures occurred before April 19, 2019, the effective date of the revenue procedure. Prior to April 19, 2019, the correction of these failures needed to be accomplished using VCP or Audit CAP. Even if the failures had not been corrected, they would still be ineligible for SCP under Rev. Proc. 2021-30, because correction would occur after the end of the 2-year period for correcting significant failures under SCP. That period would have ended on 12/31/12 for the EGTRRA failure and 12/31/18 for the PPA failure.

Hi In general I do not work with/accept take overs unless all is in good order. A CPA friend of mine asked to take over a plan that did not restate for cycle 3. I will need to help out. 401k/PS plan established in 2014 using PPA document. It is a pre-approved document. Calendar plan. Cycle 3 was due 7/31/2022 and not done. also, no interim amendments were done/provided. Reading RP 2021-30 for SCP and trying to determine if can be a SCP and also if within permitted time frame. Under section 4.1.b, looks like a plan document failure Under section 9.2, have up to 3 years to correct The restatement would be done using a pre-approved document and completed by end of February 2024. Am I correct or missing something here? Thanks

Hi Checking a Combo plan CB/DC and came across the following: CB definition of compensation is W-2 and includes all DC definition of compensation is W-2 and includes all (section 125 as well - not deemed) But Under a separate addendum, DC excludes deemed 125 compensation in Compensation and 415 Compensation (language from the document). So when I check for compensation in DC for allocating PS, Gateway, Top heavy and also for testing, how does the "deemed 125 compensation" language kick in. So confused.

Agreed and thank you. I just could not find any way out.